Liquid fossil fuels participants

10. Allow liquid fossil fuel sold for international use to be excluded from a return

The proposal is to amend Regulation 5(c) of the Climate Change (Liquid Fossil Fuels) Regulations 2008 to provide for the situation where an obligation fuel participant (supplier A) sells obligation fuel to a non-participant (supplier B), and that fuel is on-sold for use on an international aviation or maritime trip (other than a fishing trip).

Under the current provisions, that fuel cannot be subtracted from the emissions calculation for supplier A. This disadvantages supplier B as the fuel they sell cannot be exempted from emissions liability under the ETS (and therefore supplier B will need to pass on the costs of emissions liability to the purchaser). Whereas fuel sold by supplier A directly for use on an international trip can be exempted (and therefore does not need to include cost of emission liability).

To allow obligation fuel sold by a participant to a third party to be on-sold for use on an international aviation or maritime trip to be subtracted from the emissions calculation, the following amendment is proposed.

Replace:

(c) the volume of the obligation fuel sold to any person for use on an international aviation or maritime trip (other than a fishing trip) where the sale is zero-rated under the Goods and Services Tax Act 1985 less the volume of biofuels in that fuel:

With:

(c) the volume of the obligation fuel sold by the participant or a third party for use on an international aviation or maritime trip (other than a fishing trip) where the sale is zero-rated under the Goods and Services Tax Act 1985 less the volume of biofuels in that fuel:

And add:

5(2) In this Regulation third party means a person, other than an opt-in obligation fuel participant, who purchased the obligation fuel from the person required to comply with this Regulation and Regulation 6.